Delek Glbl Share Discussion Threads

[kenny] 05/8/2013 12:00

I thought I would attempt the task of estimating how Buckingham Gate could work out for we shareholders. The figures below include HUGE estimates which could prove to be wildly incorrect:

Sale of flats, say, 140,000 Square ft of flats area at £3,000 per Square ft = £420m

Mortgage, say, £72m less £14 & £11m = £47m

Cost of freehold = £30m

Development costs = £100m

Sale costs, say, 5% = £21m

Potential profit before developers share = £222m

Developer's profit and cost of financing assuming early sale of project, say, 40% = £89m

Net Profit to DGRE = £133m

Per share, 135m shares = 98p per share

I have estimated the amount of the building used for services also allowing for a recessed 7th floor being added. A material amount depends whether the flats sell at £3,000 per square foot.

Probably a foolish task to try and estimate the likely amount we DGRE shareholders may receive because of the large number of estimates but I have attempted it!

[grollfam] 29/7/2013 20:03

yup, good news, will check out info tom

[tiltonboy] 29/7/2013 18:59

Excellent news. Landmark sites like this, should sell well. Got well and truly stuffed by the REO/Battersea debacle, so it would be nice to make a few quid here!

[kenny] 29/7/2013 18:23

Good news - planning granted at Buckingham Gate (a lot quicker than I imagined the process would take):

hxxp://greaterlondonpublishing.co.uk/2013/07/delek-secures-resi-consent-next-to-palace/

Presumably DGRE will now sell the entire site with the benefit of planning consent and I also assume management will aim to complete this before the bank loan falls due in January 2014.

With Delek's record for stumbles, it is probably too early to start chilling the champagne. I am also uncertain that the profit on Buckingham Gate will be as high as speculated in the Israeli press last year.

[tiltonboy] 17/6/2013 22:30

Thanks Kenny.

[kenny] 17/6/2013 18:24

Finally received a copy of the accounts for the year to 31.12.12 late on Sunday. Heavy going – 65 pages – NAV 28p and a shrunken balance sheet after the NCP bank seizure, which actually gave rise to most of the profit (release of most of the swap liabilities) to take NAV from -2p to +28p.

Some further property sales but looks like most of the cash has gone on the Buckingham Gate transaction. Everything now seems to be riding on that development, for which I am finding it difficult to assess the likely profit. See the note from the accounts - bank debt expires January 2014, so maybe DGRE only keep it until planning is obtained (later this year?) and then sell the entire site to a developer who has the ability to raise funds to undertake the development:
=================
b. Buckingham Gate:
The Company owned directly 70% of the shares of Botley Properties Limited ("Botley"), which is the leaseholder of the property known as Buckingham Gate in London (the "Property"), and on 13 September 2012, the Company completed the purchase of the shares of Whitley Holdings Ltd. which owns the remaining 30% shares in Botley, for an amount of £6.3 million. Following that transaction the Company owns directly and indirectly 100% of the shares in Botley.

The Company through its fully owned subsidiary DGRE Developments Ltd ("DGRE Developments") acquired on 26 October 2012 a call option to purchase the freehold interest of the Property. £2.5 million were paid on the option purchase date and additional £29.5 million will have to be paid if the option is exercised.

In addition to the above transactions, the following transactions were completed also on 26 October 2012 place: (a) an early lease surrender agreement between the freeholder, Botley and the tenant. As part of this transaction, a surrender premium of £13 million was paid by the tenant out of which approximately £11.2 million was used for partial early repayment of the Botley's bank loan and approximately £1.8 million was transferred to the freeholder as part of the consideration for the call option mentioned above; (b) an agreement between Botley and its lenders - with respect to the receipt of their consent to an early termination of the lease term and also to the change of use of the Property, with alteration of the various facility terms. As part of this transaction, an additional amount of approximately £14 million was paid into an escrow account held by the lenders for the purpose of securing further partial repayment of the bank loan at the contemplated final repayment on January 2014. Further, an amount of approximately £6.4 million was deposited by the Company with a bank who in return issued bank guarantees in the same amount in favour of the lenders for the securing of interest payments and breakage costs.

DGRE Developments together with its advisors have been working to progress a development project which will include changing the use of the Property from offices to mainly luxury residential. There is currently no certainty as to whether or not the contemplated development project shall actually be implemented.
=====================
A sale post-planning being granted but before January 2014 means we receive an early payout but this is all speculation on my part. In any event, we may not hear much from the company until the end of this year or early in 2014.

[tiltonboy] 17/6/2013 15:04

Any sign of these figures?

[grollfam] 27/5/2013 14:18

well spotted. What we lost on NCP hopefully we can make back on this RESI development

[tiltonboy] 27/5/2013 13:34

Excellent news. It will be interesting to see if they make any comment with their figures, whenever they might be.

[tiltonboy] 05/4/2013 11:21

Thanks for that.

Some sort of confirmation on the status of their involvement in the Buckingham Gate project would be welcome.

[kenny] 05/4/2013 11:02

Great minds must think alike because I emailed the company yesterday to ask. I am told they will not be out until the end of May! That is 5 months after the year end and very slow but I guess now that DRE is not quoted in Israel, they are not under a deadline.

My view is that we are unlikely to see any more money until Buckingham Gate is developed and sold - or at least progressed to the stage with planning etc. so they can sell the project to a developer who has funds/access to bank finance in order to develop it into flats at the rumoured price of £50m each. Could be a big payday eventually but who knows when eventually will be.

[tiltonboy] 05/4/2013 10:05

Kenny,

Any sign of any figures from this shower?

Looks like they were out at the end of March last year!

[paperclip3] 03/3/2013 11:14

Any news anyone?

[grollfam] 27/12/2012 10:02

nope all quiet..suppose we will have to wait for december accounts

[paperclip3] 27/12/2012 09:43

Nearing the end of the year; has anybody heard anything?

[kenny] 09/11/2012 17:19

It is nice to help the UK government to save money while at the same time making money for DGRE and it's shareholders! MD talks about "a number of exciting projects" - wonder what else is in the woodwork:


Department for International Development ends lease on its Palace Street HQ
9 November 2012

A deal enabling the Department for International Development (DFID) to vacate offices on Palace Street, next to Buckingham Palace, and move to a freehold block owned by the government will save tax payers £62.5million Francis Maude, Minister for the Cabinet Office, announced today.

The Government Property Unit – part of the Cabinet Office's Efficiency and Reform Group – worked with DFID to secure an early exit from a lease on the 160,000 sq. ft. office at 1 Palace Street. The office will be vacated next year and the department will move into freehold space at 22/26 Whitehall. 22/26 Whitehall was used by the Cabinet Office but from 2010 staff were moved into space shared with HM Treasury on 1 Horse Guards Road.

This move is another example of the work of the Efficiency and Reform Group to drive savings from the civil estate by consolidating departments into the government's freehold space, selling unnecessary buildings and where possible breaking leases on underused offices. Since May 2010 the government has reduced the running cost of its estate by over £350 million, exiting over 1,070 buildings across the country. Just last month the iconic Admiralty Arch was leased raising £60 million and saving the running costs for what was a vacant building.

Francis Maude said:

"For too long government departments were allowed to lease properties at taxpayers' expense with absolutely no central coordination. In May 2010 government departments occupied 115 different properties just in Bristol."

"The Efficiency and Reform Group is making sure government works as one to use the freehold property it already owns more efficiently rather than leasing expensive vanity offices. We're sharing space, drawing on the best-practice of the private sector, and we now publish information on how departments use their property so armchair auditors everywhere can scrutinise what we are doing and hold us to account.

"Since May 2010 we've saved over £640 million for taxpayers through our property reforms but there's much more we can do to drive further savings. Last month we leased Admiralty Arch raising another £60 million and DFID leaving 1 Palace Street will save a further £62.5 million. It's this non-stop commitment to saving money that puts us on track to save £8 billion this year."

Commenting on her department's move, Justine Greening, Secretary of State for International Development, said:

"Moving to a smaller government-owned building will save DFID £62.5m by 2020."

"As well as saving money, the move will use space more efficiently and put us at the forefront of the government's plan to reduce the cost of delivering public services. Moving to the heart of Whitehall will mean we can work much more closely with the Foreign Office and other departments to deliver UK policy around the world."

Eyal Rabinovitz of Delek Global Real Estate said:

"This is one of a number of exciting projects we are currently working on and we are delighted to have reached an agreement that enables the Government to extricate itself from considerable lease obligations. The deal also sets up the possibility of a major project in a prime location.

"In anticipation of gaining vacant possession, we are now looking at plans for 1-3 Buckingham Gate, with a view to submitting a planning application in due course. Because of the property's superb location, all options are being considered.""

Delek Global Real Estate report that they are considering redevelopment of 1 Palace Street to create residential property with one of the most prestigious addresses in the World. This project would boost London's construction industry and generate revenue for Westminster Council through planning payments, none of which could happen had government sat on the property.

[tiltonboy] 09/11/2012 09:06

Given their precarious financial position, I think they will jv it, or sell the scheme once planning permission has been granted.

[kenny] 09/11/2012 08:30

Buckingham Gate was valued at £72m in 2009. Let's assume the mortgage was 100% at that date and development and marketing costs etc are £128m, for a total of £200m.

Assuming £500m consideration for the flats that gives a profit of £300m or 220p per share. Wow!?!?!?

[kenny] 09/11/2012 08:10

Thanks grollfam. This looks very profitable albeit it will likely consume all of DGRE's cash resources, and more, to pay development costs. Therefore, short term we may not receive any more dividends/buybacks but the wait should be worthwhile!

[grollfam] 09/11/2012 07:04

Kenny, hopefully we can re-coup some of the losses on NCP here



Delek in office-to-resi switch opposite Buckingham Palace



Government department to move out of 1 Buckingham Gate to make way for luxury flats worth up to £500m


The property company of one of Israel's richest men is planning to turn a central London government office building into high-end flats - where residents will have a very famous neighbour.

Energy magnate Yitzhak Tshuva's Delek Global Real Estate has reached an agreement with the government at its 1 Buckingham Gate office building, paving the way for a conversion into luxury flats that could be worth
more than £500m.

The 170,028 sq ft building has a grade II-listed facade. It is on the corner of Buckingham Gate and Palace Street, directly opposite Buckingham Palace, and has views of the Queen's residence and its gardens.


Delek Global Real Estate is in the initial planning stages for the project, with a view to submitting a planning application to Westminster City Council next year.

The tenant, the Department for International Development (DFID), advised by the Government Property Unit, has agreed with Delek Global that it will move out of the building next year and end its lease, ahead of its original lease termination in 2020, which will save the government £63m.

The redevelopment is expected to cost more than £100m.

Though he declined to comment on the scheme's value, Delek Global chief executive Eyal Rabinovitz said £3,000/sq ft was attainable for high-end residential in this location. This would value it at more than £500m.

"While other areas have been going through a crisis for some years, London residential prices have continued to boom," Rabinovitz said. "It is very attractive for investors from Asia, the Middle East and Europe, especially for a project in such a unique location.

"It is the very early stages of the project, but we would hope to have a planning application in place next year, when the tenant is due to vacate, so we hope to commence the redevelopment soon after that. We think the situation is beneficial for us - as we get to undertake the redevelopment - and the tenant, as it removes an expensive lease liability ahead of time."

Delek Global has not yet selected an architect or brought in a development manager, but it is likely to rely on the expertise of El-Ad, the high-end residential group also owned by Tshuva, which undertook a highly profitable conversion of the Park Plaza hotel in New York into apartments.

Earlier this year, Tshuva completed a restructuring of Delek Real Estate, the listed parent company of Delek Global Real Estate, in which he owned a 51% stake. The company has now been privatised and is 100% owned by Tshuva.

Bondholders that were owed £353m agreed to a repayment of £112m, in return for releasing the company from its liability.

H2SO advised Delek Global Real Estate; Savills acted for the Government Property Unit and DFID.

[grollfam] 17/10/2012 15:34

Thanks Kenny, will compare your notes to the next set of accounts when they are released...................

[kenny] 17/10/2012 15:14

Impossible to accurately know what properties are left but here is my best stab at it:

Two properties in Finland. Two properties in Switzerland (bit unsure about this). About 3 or 4 properties in Germany (but they may all be under water). UK seems to be Buckingham Gate (sale stalled?), Mitre House (thought it had been sold?), and one in each of Birmingham, Dundee and Nottingham.

Apart from properties, there should also be a lot of cash from the sales in hand and also whatever is left of the £31m cash on the 30.06.12 balance sheet after paying current creditors.

[kenny] 17/10/2012 10:32

Delek RE to move, lay off workers as it goes private
By Shelly Appelberg | Oct.17, 2012 | 5:33 AM
Seven years after going public, Yitzhak Tshuva's troubled Delek Real Estate is set to lay off six out of every 10 employees.

Of the company's 42 workers, 25 are expected to be dismissed following Tshuva's decision to take the company private after coming to terms with bondholders in a deal that slashed NIS 1.6 billion of the NIS 2.15 million owed them. The smaller company will also vacate its Ramat Gan offices.

The firm said in a statment that due to the agreement with the bondholders and the delisting of the company, it would "continue its operations as a private company on a reduced scale."

Among the changes, CFO Daniel Leventhal, who oversaw the negotiations with the bondholders, is expected to step down and take on another position at Tshuva's Delek Group. CEO Eran Meital is also expected to leave once the bondholder agreement is fully implemented.

[grollfam] 16/10/2012 19:44

thanks Kenny, a sad end...hoped we would have had "blue sky" from NCP, but think Blackstone will take it over...